Asda stands by ‘Everyday low prices’ marketing strategy despite sales slump

Asda’s chief executive Andy Clarke says he is “pleased” with the retailer’s performance in a “distressed market” but admits it has more to do to see off the threat of the discounters as sales fall.

Sales at stores open for more than a year were down 1.6% in the 13 weeks to 30 September, a step back from 0.6% like-for-like growth in the second quarter. However, that was a better performance than the rest of the grocery market, with Sainsbury’s seeing sales fall 2.1%, Tesco’s dropping 4.6% and Morrisons slumping by 6.3%.

Speaking at an event in London today (13 November), chief executive Andy Clarke said while he is “disappointed” by the sales decline Asda does continue to outperform its main competitors and its market share has increased to 17.3% as the whole grocery market experiences a slowdown. He said moves Asda made 12 months ago to invest in price and quality were paying off and that it is a strategy he expects to “win” in the long term.

Clarke also said Asda would stand by its “longstanding Everyday low price” marketing strategy despite rivals also launching pricing campaigns, with Sainsbury’s the latest to join the price war with its plans to invest £150m in price cuts. He also ruled out any return to higher levels of promotional activity.

“A new reality is upon us and although we were the first to adapt, we need to do everything to remain ahead of our traditional competitors whilst removing reasons for customers to go to the small discount shops. That’s the strategy we are on and we need to keep accelerating it.

“We won’t be knee jerked into reacting to short term tactics. Vouchers can win quarters, but strategies win decades,” he added.

Asda cited online shopping as a highlight, with sales up 19.6%, ahead of the wider market. It has also launched two new “format” large store trials in Coventry and Grantham as it looks for ways to make better use of its large superstores.

However, Clarke admitted that Asda still faces stiff competition from the discounters and that the focus would be on removing reasons for customers to go to the discount stores, focusing on quality and range. He said that would in part be done through a close relationship with its sourcing subsidiary Internal Procurement Limited, which has delivered £190m in savings to Asda while maintaining quality by shortening “field to fork” times

Clarke said:  “Asda has begun to step away from the ‘Big Four’ and outperform its traditional competitors. We have more to do on the discounters – but we continue to close the gap on price and offer ten times the range across stores and online.”